Flight attendants at the beleaguered budget carrier Spirit Airlines have been urged to take stock of their personal finances after the Florida-based airline warned that its own financial situation was so dire that it might not survive the next year.
The revelation came in a regular update to the US Securities and Exchange Commission on Monday in which Spirit cautioned that there was “substantial doubt that the company can continue as a going concern within the next 12 months.”
Spirit’s chief executive, Dave Davis, however, later told staffers in an internal memo that this phrase had been required by outside auditors and that the purpose of the phrase was to convey the potential risk to the company if no action was taken.
Davis told worried employees that the airline was, indeed, taking action through a slew of cost-cutting and money-raising initiatives. He didn’t, however, comment on another line in the update that warned “there can be no assurance that such initiatives will be successful.”
“Spirit is a critical part of the U.S. aviation industry,” Davis wrote. “We have saved consumers hundreds of millions of dollars, whether they fly with us or not. We remain hard at work on many initiatives to protect our unique franchise, our valued team members, our business partners, and our guests who place their trust in us every day.”
While Davis’ update to employees tried to be as positive as possible, an internal memo from the Association of Flight Attendants was less than upbeat.
“We need to be direct,” the memo said. “Spirit is in a fragile financial position, likely more so than at any point in the previous 24 months.”
“We urge you to take an honest look at your personal situation, examine all your options, and prepare for all possible scenarios,” the memo continued. “Use this time to assess your financial situation and begin strategizing how best to weather the financial impact that flying cutbacks may have on your household.”
Spirit has been struggling financially for several years, although its most recent woes can be traced back to a failed merger with JetBlue in January 2024.
Sara Nelson, president of the flight attendant union, said in a post on her X account that she was angry that JetBlue had been blocked from acquiring Spirit in a mega deal that the Biden administration objected to because it would allegedly harm competition.
“The objection to the merger was a fanciful idea that Spirit would just keep playing the ULCC [ultra low cost carrier] ‘role’ of consumer choice and competition with the majors [American, Delta, United],” Nelson wrote.
After the JetBlue merger was blocked by a federal judge, Spirit ended up entering into a pre-packaged Chapter 11 bankruptcy process late last year. The airline quickly emerged from that process in March, but just months later, Spirit is once again warning of major financial concerns.
The current issue is that the Chapter 11 process required Spirit to take on a lot more debt from investors. These agreements contain covenants that require Spirit to maintain a certain level of liquidity.
Spirit now says it is not making enough revenue to maintain the liquidity levels required. To make matters worse, Spirit’s credit card processing provider has demanded that the airline have more cash in the bank, or it won’t renew its agreement at the end of 2025.
To generate more cash, Spirit plans to sell some planes and spare airport gates to rivals, while hundreds of pilots will also be furloughed over the coming months. Davis is also hoping that Spirit’s new fare products will help the airline weather the current storm.
